Chapter managing and monitoring budget implementation 1 A. Budgetary accounting

1.

Procurement cycle

 

 The procurement cycle includes the following stages:

 

•

 Identification of user needs and project preparation. For supplies, this

identification consists of establishing what users require, specifying of the

goods or services to be procured, reviewing whether the needs can be met

from available stores, whether they can be aggregated with any other

outstanding similar requirement, etc. For construction projects, different

variants are reviewed to choose the most cost-effective and the project

execution plan is prepared to include the characteristics of the project. At this

stage, the possibility of a public-private partnership should also be reviewed,

as well as the appropriate arrangements.

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•

 Determination of the procurement procedure. A key step is to determine the

procurement procedure (restricted list of vendors, local competitive building, or

international competitive bidding). For expenditures financed by external

sources, procurement procedures must conform to the guidelines established

by the external lender or donor. Major multinational trade arrangements like

the World Trade Organization’s Government Procurement Agreement also set

legal obligations for national procurement systems and practices.

 

•

 Tendering process (generally preceded by a prequalification procedure,

depending on the tendering procedure). For competitive bids, a letter of

invitation is sent to tenders. This letter should specify the characteristics of the

project or the goods and services to be supplied, the selection criteria, and the

award arrangements. Price is an important criterion in awarding contracts, but

cannot be the sole criterion. In many cases, price is less important than

technical and quality criteria. Choosing systematically the lowest-priced bids

could lead to buying obsolete or poor-quality goods or services. To avoid an

excessive bias toward low-priced bids, it is often desirable to review the bids

in two steps, first on technical grounds, and then on the basis of cost.